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Wagner has for some time been replenishing its ranks by recruiting from Russian prisons. It is hardly still the elite force it has long portrayed itself as, albeit still better trained and/or motivated than the average army conscript.
In Bakhmut, as in Vuhledar to the south, the Ukrainians have essentially allowed the Russians to waste a lot of resources on what is turning out to be a fairly inconsequential chunk of land. Meanwhile, the Russian general staff has finally realized that putting more resources in won't lead to a breakthrough in the Dombas, and will leave the Russians weakened if the Ukrainians do manage to launch their expected next counteroffensive.
Another problem with pouring more resources into one small part of the front is that they genuinely don't know where the Ukrainians might choose to attack. They might try to force a river crossing in Kherson and drive toward Crimea, also cutting off the launch facilities for a lot of Russian attacks on the Ukrainian rear. They might drive south in Zaporizhia oblast either toward Melitopol or Mariupol, cutting off the land route to Crimea. Or they might push eastward anywhere along the front in Luhansk and Donetsk. Or any combination thereof.
Meanwhile, Chechen paramilitaries are supposed to replace the Wagner Group in Bakhmut, which reinforces the idea that the Russian Army itself does not place great strategic significance on that piece of land.
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